Page 178 - DCOM106_COMPANY_LAW

Unit 10: Management of Company

Notes
directors on REL’s board, choose the Vice-Chairman of the company and even decide the
tenure of the Chairman, Vice-Chairman and the directors appointed by him.
REL sought to vest these powers with its prime shareholder, Reliance Industries.
Question
Why does Reliance want alteration in Reliance Energy’s articles? (Hint: due to the conflict
between the Ambani brothers)

10.15 Summary

Section 2 (13) defines a Director as including “any person occupying the position of director,
by whatever name called.”
The articles of a company, sometimes, designate its directors as governors, members of
the governing council or the board of management or may give them any other title, but
so far as the law is concerned, they are simply directors.
A deemed director need not necessarily be an individual. The person may even be a body
corporate say, a holding company.
The directors act as agents of the company and the ordinary rules of agency apply.
The directors are also sometimes described as managing partners.

Directors are treated as officers of the company [s. 2(30)].
10.16 Keywords

Deemed Director: For certain purposes, a person even when he is not a director may be deemed
to be a director of a company.

Director: Any person occupying the position of director, by whatever name called director.
Legal Position of Director: The exact position of ‘Director’ is hard to define, as no formal definition,
either statutory or judicial, of the term has been given. However, judicial pronouncements have
described them as (i) agents, (ii) trustees, or (iii) managing partners.
Statutory Duties: The statutory duties are the duties and obligations imposed by the Companies
Act.

10.17 Review Questions

1. Define ‘Director’. What is his legal position in a company?
2. To what extent can the directors of a company be considered as trustees, agents or managing
partners of the company? Explain your answer with reasons.
3. Who can be a director? What qualifications, if any, must a person possess in order to
become a director of a company?

4. How are the directors of a company appointed?
5. What are the disqualifications of a director?
6. Can the directors of a company be appointed by the Board of directors?
7. State the powers of the Board of directors which can be exercised only with the approval
of the members in a general meeting of the company.

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